Otsego City Council learned more about franchise fees and the steps to implement them in a working session on September 27.
Cities have the legal authority to implement franchise rights to increase revenues or cover increased municipal costs resulting from utility operations. Members of Otsego City Council are focused on the idea that the franchise fee could help their pavement management program, according to Otsego City Administrator Adam Flaherty.
The earliest it could be implemented, should the council go ahead, is summer 2022. Franchise fees eliminate the need for costly assessments for residents and building owners by providing a source significant revenue for pavement management projects which are regularly billed to all residents and building owners.
There would be a lot to do by then to make it a reality by next summer. The first step towards implementing a franchise fee is passing an ordinance that lays the groundwork but does not establish the franchise fees.
The second step is that the city must notify the utility company at least 90 days (or 60 days under the old CenterPoint franchise agreement) before the city passes the second ordinance implementing the charge. franchise. This gives the utility company the opportunity to prepare for the possible implementation of the franchise fee.
The third step is for the board to consider an order to implement the franchise fee, which may vary depending on the classification of the client (i.e. residential, commercial, industrial).
Franchise fees apply to all users of public services, even those whose entities may otherwise be exempt from property taxes, such as religious organizations.
In the fourth step after the council passes the second ordinance implementing the fee, the city is required to notify utility companies at least 90 days before the start of the franchise fee.
Otsego City Council plans to embark on this four-step process this fall.